Pakistan, Afghanistan to resume high-level trade talks next month

August 10, 2017MTNV Staff Contributor

The deteriorating security situation also triggered an intermittent war of words between the two countries with Afghan officials holding Pakistan responsible for each such incident. (Source: Google Maps) Top News

Pakistan and Afghanistan have decided to resume high-level trade talks next month, the first such engagement between the two countries in nearly two years as Kabul wanted to involve India in dialogue. The proposal for resuming talks by convening a meeting of their Joint Economic Commission (JEC) in Kabul was made by Afghanistan’s ambassador to Pakistan Hazrat Omar Zakhilwal during a meeting yesterday with Pakistan’s Finance Minister Ishaq Dar.

It will be the first high-level talks between the two neighbouring countries since November 2015 when Afghan President Ashraf Ghani’s condition to continue talks with Pakistan on all issues, including trade, subject to involvement of India.

The deteriorating security situation also triggered an intermittent war of words between the two countries with Afghan officials holding Pakistan responsible for each such incident. “It will be a great opportunity for Islamabad and Kabul to repair their diplomatic and business relations which have discontinued since November 2015,” a source privy to the development told Dawn.

An official statement issued after the meeting said ambassador Zakhilwal stated that the next session of the Pak-Afghan Joint Economic Commission (JEC) was due and proposed that it might be held in Kabul in September. Dar welcomed the proposal and said mutually convenient dates be decided to hold the session next month.

The deadlock between Afghanistan and Pakistan was due to Kabul’s insistence that India should be included in bilateral and trilateral agreements. Kabul wanted to include India in the Trilateral Transit Trade Agreement — Pakistan, Afghanistan and Tajikistan.

Afghanistan also wants access to markets of India and SAARC countries through Wagah border, according to officials. Dar was of the opinion that the JEC meeting should provide an opportunity to discuss measures for furthering the cause of economic cooperation between the two countries.

The Afghan envoy was informed that Pakistan’s economic affairs division would cooperate with the Afghan embassy to work out details for the JEC meeting whose main focus will be enhancement of bilateral trade and economic cooperation. The 10th Pak-Afghan JEC session was held on November 23, 2015, in Islamabad.

The JEC is a highly important forum that takes into consideration important issues, including trade facilitation, enhancement of bilateral and transit trade, highway and railway projects, scholarship scheme for Afghan students, as well as potential joint ventures in various other sectors.

One of the fallout of the suspension of talks was a decline in bilateral trade. Pakistan’s exports to Afghanistan dropped by a significant 27 per cent over the past one year, owing to several factors.

Pakistan’s exports to Afghanistan had reached an all-time high of USD 2.4 billion in 2010-11. It remained over USD 2 billion in the subsequent two years. Since then, exports started to dwindle and hit USD 1.43 billion in 2015-16. In the first quarter of the current financial year, exports were recorded at USD 362.5 million. It clearly reflects that the annual exports to Afghanistan will now be around USD 1 billion when the figure for 2016-17 is finalised.

Talks on several issues have been on the back burner for a couple of years because of Kabul’s loss of interest in concluding a trade liberalisation regime with Pakistan. In 2014, both sides agreed to initiate negotiations on a bilateral preferential trade agreement (PTA), with Pakistan sharing a draft text of the agreement with Afghanistan.

In 2015, Afghanistan conveyed to Pakistan that it would formally respond to the draft PTA by January 2016. This issue will be raised at the upcoming JEC meeting, the report said. To encourage business-to-business interaction between the two countries, a joint business council (JBC) comprising leading businessmen from both sides was established.

The first meeting of the JBC was scheduled for August 2015. When Kabul failed to send its response, a new date for the JBC meeting was scheduled for February 17 last year in Islamabad. However, no meeting of the JBC has been held so far.

Pakistan recently reminded Afghanistan to convene the 7th meeting of the Afghanistan-Pakistan Transit Trade Coordination Authority in Kabul as had been agreed at the last meeting held in 2016. It will be one of the important issues to be raised at the JEC meeting. The draft text on avoidance of double taxation was also shared, but no follow-up meeting has been held so far.